The pandemic forced workers who lost their jobs to COVID-19 – through government lockdowns and the public’s general fear of congregating – to innovate.
Many took to the “gig economy” to make ends meet, or became their own boss.
In a recent Senate floor speech, U.S. Sen. Rick Scott called attention to how President Joe Biden’s recently enacted $1.9 trillion American Rescue Plan Act would bite these workers – and refute Biden’s pledge to raise taxes only on the “wealthy.”
The law, said Scott, would hurt workers with companies like Uber, AirBnB, Lyft, DoorDash and others.
The Florida Republican pointed out that contractors with these companies would be forced to file 1099 forms with the IRS.
Before the Biden plan, gig workers only had to report their income at $20,000 or more and 200-plus transactions.
Beginning next year, that drops to $600, and the transaction threshold is eliminated, said Scott.
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Scott noted that before the law was passed, activists representing these workers, including groups for Asian-American, Hispanic, and women business owners, appealed to leading Democrats – House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer – to remove this provision, or reconsider it.
Their pleas fell on deaf ears.
“Democrats kept the provision buried deep within the bill, hoping the American public wouldn’t notice,” Scott said.
“The Democrats’ new reporting requirements are effectively a tax hike, and will ultimately hurt low- and middle-income contractors, the self-employed and freelancers – many of which have been devastated by the pandemic.”
“It wasn’t that long ago that President Biden promised that he wouldn’t raise taxes on anyone making less than $400,000. Obviously, that wasn’t true.”
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Scott pointed out Democrats tried a similar move with the Affordable Care Act in 2011, bowed to public pressure when it proved to be unpopular and removed it, and then declared victory for the little guy.
Scott said he has proposed a bill offering exactly what Democrats supported a decade ago: simply dumping the new reporting requirement and re-establishing the previous thresholds.
“Increasing reporting requirements on our gig workers will create new and unexpected challenges for independent, self-employed workers and entrepreneurs who are already facing an incredible burden created by the coronavirus,” said Scott.
Two business publications provided the ultimate Biden-Democratic spin on the plan.
Bloomberg noted this provision is “intended to help gig economy workers correctly pay their taxes and keep the IRS from losing out on hundreds of millions of dollars in annual revenue.”
Forbes, meanwhile, maintained, “The end result is that many more gig workers can accurately report their income — which, in turn, means that federal and state governments will collect billions more in income tax revenue.”
Many of us, like Sen. Scott, would call that “revenue” by its better known name: taxes.
Forbes quoted a tax analyst who said the new mandate will reap the feds a “more than $8 billion boost in tax revenue the first effective year and that it ‘will ramp up over years.’”